Nos. 17-15807, 17-16000 UNITED STATES COURT OF ......2019/03/11 · minority families, primarily through safe, affordable home loans and small business loans. CRL conducts ground-breaking

Nos. 17-15807, 17-16000

UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

RICHARD ZABRISKIE; KRISTIN ZABRISKIE,

Plaintiffs-Appellees

v.

FEDERAL NATIONAL MORTGAGE

ASSOCIATION,

Defendant-Appellant.

Appeal from the United States District Court for the District

of Arizona Case No. 1:13-cv-02260-SRB, Hon. Susan R. Bolton

BRIEF OF AMICI CURIAE NATIONAL ASSOCIATION OF

CONSUMER ADVOCATES, UNITED STATES PUBLIC

INTEREST RESEARCH GROUP EDUCATION FUND, INC.,

AMERICANS FOR FINANCIAL REFORM EDUCATION FUND,

CENTER FOR RESPONSIBLE LENDING, AND CONSUMER

REPORTS, IN SUPPORT OF

PLAINTIFFS-APPELLEES’ RICHARD ZABRISKIE, ET AL.,

PETITION FOR REHEARING OR REHEARING EN BANC

Christian Schreiber

[email protected]

Olivier Schreiber & Chao LLP

201 Filbert Street, Suite 201

San Francisco, CA 94133

(415) 484-0980

Attorneys for Amici Curiae

Case: 17-15807, 03/11/2019, ID: 11223484, DktEntry: 92, Page 1 of 29

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ................................................................... ii

CORPORATE DISCLOSURE STATEMENT ..................................... .v

STATEMENT OF INTEREST .............................................................vii

ARGUMENT ............................................................................................ 1

I. Fair And Accurate Reporting Is Essential To

Equitable Credit Markets For All Consumers ...................... 1

II. Mortgage Screening Companies, Like Fannie Mae,

Which Furnish Reports Determining A Potential

Loan’s Eligibility For Resale In Secondary Mortgage

Markets, Are Consumer Reporting Agencies ....................... 7

CONCLUSION ....................................................................................... 13

CERTIFICATE OF COMPLIANCE WITH TYPE-

VOLUME LIMITATION, TYPEFACE

REQUIREMENTS, AND TYPE

STYLE REQUIREMENTS ................................................................... 15

CERTIFICATE OF SERVICE ............................................................. 17


ii

TABLE OF AUTHORITIES

Federal Cases Page(s)

Adams v. LexisNexis Risk & Info. Analytics Group, Inc.,

2010 WL 1931135 (D.N.J. May 12, 2010) ................................................ 10

Boca Ciega Hotel, Inc. v. Bouchard Transportation Co., Inc.,

51 F.3d 235 (11th Cir. 1995) ...................................................................... 4

California Bankers Ass’n v. Shultz,

416 U.S. 21 (1974) ...................................................................................... 8

Cisneros v. U.D. Registry, Inc.,

39 Cal. App. 4th 548 (1995) ..................................................................... 10

Cortez v. Trans Union, LLC,

617 F.3d 688 (3d Cir. 2010) ........................................................................ 9

Estiverne v. Sak’s Fifth Avenue,

9 F.3d 1171 (5th Cir. 1993) ...................................................................... 10

Freckleton v. Target Corp.,

81 F.Supp.3d 473 (D. Md. 2015) ................................................................ 9

Gill v. Byers Chevrolet LLC,

2006 WL 2460872 (S.D. Ohio Aug. 23, 2006) .......................................... 10

Gorman v. Wolpoff & Abramson, LLP,

584 F.3d 1147 (9th Cir. 2009) .................................................................... 7

Greenway v. Info. Dynamics Ltd.,

524 F.2d 1145 (9th Cir. 1975) .................................................................... 9

Guimond v. Trans Union Credit Information Co.,

45 F.3d 1329 (9th Cir. 1995) .................................................................. 4, 8


iii

Hoke v. Retail Credit Corp.,

521 F.2d 1079 (4th Cir. 1975) .................................................................. 10

Jarzyna v. Home Props., L.P.,

763 F. Supp. 2d 742 (E.D. Pa. 2011) .......................................................... 9

Jones v. Federated Financial Reserve Corp.,

144 F.3d 961 (6th Cir. 1998) ...................................................................... 8

Nelson v. Chase Manhattan Mortgage Corp.,

282 F.3d 1057 (9th Cir. 2002) .................................................................... 4

Russello v. U.S.,

464 U.S. 16 (1983) ...................................................................................... 7

Valentine v. First Advantage Saferent, Inc.,

2009 WL 4349694 (C.D. Cal. Nov. 23, 2009) ........................................... 10

Zabriskie v. Federal Nat. Mortg. Ass’n

912 F.3d (9th Cir. 2019) .................................................................. 7, 11, 12

Federal Statutes

12 U.S.C. § 1716 ........................................................................................... 2

12 U.S.C. § 1719(a)(2)(B) ............................................................................. 2

15 U.S.C. § 1681 et seq........................................................................ passim

Other Authorities

Federal Housing Finance Agency, Foreclosure Prevention Report

(July 2018) .................................................................................................... 6

Piketty, et al., World Wealth and Income Database

(http://wid.world/country/usa/) .................................................................. 1


iv

Joint Center for Housing Studies, Harvard University, Is

Homeownership Still an Effective Means of Building Wealth for

Low-income and Minority Households? (Was it Ever?),

Christopher E. Herbert, et al. (Sept. 2013) ............................................... 1

Merrill Lynch, Home in Retirement: More Freedom, New Choices, Fig. 5

(2015); available at agewave.com/wp-content/uploads/2016/07/2015-ML-

AW-Home-in- Retirement_More-Freedom-New-Choices.pdf ................... 2


v

CORPORATE DISCLOSURE STATEMENT

The National Association of Consumer Advocates (NACA) is a

non-profit, membership organization of hundreds of law professors,

public sector lawyers, private lawyers, legal services lawyers, and

other consumer advocates. Organized under the laws of the

Commonwealth of Massachusetts, it is tax-exempt under section

501(c)(3) of the Internal Revenue Code. It has no parent corporation,

nor has it issued shares or securities.

United States Public Interest Research Group Education Fund,

Inc. (U.S. PIRG Education Fund) is a nonprofit organization under

section 501(c)(3) of the Internal Revenue Code. It has no parent

company and issues no stock.

Americans for Financial Reform Education Fund is a nonprofit

organization under section 501(c)(3) of the Internal Revenue Code. It

has no parent company and issues no stock.

Center for Responsible Lending (CRL) is a non-profit

organization under section 501(c)(3) of the Internal Revenue Code.

CRL is a supporting organization of the Center for Community Self-

Help, which is a non-profit organization under section 501(c)(3) of the


vi

Internal Revenue Code. Neither CRL nor the Center for Community

Self-Help has issued shares or securities.

Consumer Reports is a is a nonprofit organization under section

501(c)(3) of the Internal Revenue Code. It has no parent company and

issues no stock.

Dated: March 11, 2019 Respectfully submitted,

/s/ Christian Schreiber

Christian Schreiber



vii

STATEMENT OF INTEREST

The National Association of Consumer Advocates is a

national nonprofit association of hundreds of attorneys and consumer

advocates committed to representing consumers’ interests. Its members

are private and public sector attorneys, legal services attorneys, law

professors and law students whose primary focus is the protection and

representation of consumers. NACA’s mission is to promote justice for

all consumers by maintaining a forum for communication, networking,

and information-sharing among consumer advocates across the country,

particularly regarding legal issues, and by serving as a voice for its

members and consumers in the ongoing struggle to curb unfair or

abusive business practices that affect consumers. In pursuit of this

mission, making certain that corporations comply with state and

federal consumer protection laws in general and the FCRA in

particular, has been a continuing and significant concern of NACA since

its inception. In furtherance of that mission, NACA has participated as

an amicus in hundreds of appeals, including the Fair Credit Reporting

Act (the “FCRA”), 15 U.S.C. § 1681a issues raised in McCalmont v.

Federal National Mortgage Association, 677 F. App’x 331 (9th Cir.


viii

2017).

U.S. PIRG Education Fund is a 501(c)(3) independent, non-

partisan organization that works on behalf of consumers and the public

interest. Through research, public education, outreach, and litigation, it

serves as a counterweight to the influence of powerful special interests

that threaten the public’s health, safety, or well-being. U.S. PIRG

Education Fund regularly participates as amicus curiae in cases that

will have a substantial impact on consumers and the public interest,

such as this one. U.S. PIRG Education Fund strongly supports the

FCRA and has long advocated for strong enforcement of the important

protections that it provides consumers.

Americans for Financial Reform Education Fund (AFREF)

works in concert with a coalition of more than 200 consumer, investor,

labor, civil rights, business, faith-based, and community groups to lay

the foundation for a strong, stable, and ethical financial system.

Through policy analysis, education, and outreach, AFREF actively

engages in advocacy for stronger consumer financial protections,

including the consumer credit reporting protections in the FCRA.

Center for Responsible Lending is a non-profit, non-partisan

research and policy organization that works to protect homeownership


x

and family wealth by helping to eliminate abusive financial practices.

CRL is affiliated with the Center for Community Self-Help, a non-profit

community development financial institution focused on creating asset-

building opportunities for low-income, rural, women-headed, and

minority families, primarily through safe, affordable home loans and

small business loans. CRL conducts ground-breaking research focused

on consumer lending: primarily mortgages, payday loans, student debt,

bank overdrafts, and auto loans. Through its research and policy work,

CRL seeks to ensure a fair, inclusive financial marketplace that creates

opportunities for all responsible borrowers, regardless of their income.

Consumer Reports is an expert, independent, non-profit

organization, founded in 1936, that works side by side with consumers

for a fair, transparent, truthful, and safe marketplace. It is the world’s

largest independent product-testing organization, using its dozens of

labs, auto test center, and survey research department to rate

thousands of products and services annually. It employs its rigorous

research and testing, consumer insights, journalism, and policy

expertise to inform purchase decisions, improve the products and

services that businesses deliver, and drive effective legislative and

regulatory solutions and fair competitive practices. Consumer Reports

i


has been active for decades in a wide range of policy issues affecting

consumers, including consumer financial services.

Amici curiae submit this brief in support of Plaintiffs-Appellees

Richard and Kristin Zabriskie, and in support of the thousands of low-

and middle-income consumers who will be harmed if the Ninth Circuit

Court of Appeals denies Plaintiffs-Appellees’ Petition for Rehearing or

Rehearing En Banc and overturns the District Court’s Order finding

that Fannie Mae is a “consumer reporting agency” within the meaning

of the FCRA, 15 U.S.C. § 1681a. Zabriskie v. Federal Nat’l Mortg. Ass’

109 F.Supp.3d 1178, 1184 (D. Ariz. 2014). Fannie Mae plays an

essential role in the mortgage market; virtually all home-buying

consumers are affected by its conduct in the market and the consumer

credit information it evaluates and provides to lenders. The accuracy of

information provided by Fannie Mae is thus of paramount importance

to consumers. As will be explained, requiring that Fannie Mae, like

other consumer reporting agencies, adheres to the prescriptions of the

FCRA is essential for ensuring that consumers are appropriately

protected consistent with the statute’s intent. The District Court’s

holding ensures that Fannie Mae is subject to the “maximum possible

accuracy” requirement of the FCRA, which is intended and designed to

x


xi

provide consumers – and creditors – significant protections and

benefits. The decision of a divided panel of this Court, on the other

hand, would empty the field of entities responsible for ensuring the

accuracy of consumer information in the mortgage lending process.

Amici submit this brief pursuant to Federal Rule of Appellate

Procedure 29. Pursuant to Federal Rule of Appellate Procedure 29(a)

and Circuit Rule 29-2(a), Amici certify that all parties have consented

to the filing of this brief.

Pursuant to Federal Rule of Appellate Procedure 29(c)(5), Amici

state that no party or counsel for any party in the pending action

authored the proposed amicus brief in whole or in part, or made a

monetary contribution intended to fund the preparation or submission

of the brief, and no other person or entity made a monetary

contribution intended to fund the preparation or submission of the

brief, other than the amici curiae, their members, or their counsel.


1

ARGUMENT

Fannie Mae’s inaccurate reporting of the Plaintiffs-Appellees’

financial history directly resulted in their erroneously being denied

mortgage financing. Unless Fannie Mae can be held accountable for this

error, the same fate awaits every other consumer with a similar

financial history. As explained below, Fannie Mae is a consumer

reporting agency for pertinent purposes of the Fair Credit Reporting

Act, and is appropriately held accountable under that Act for ensuring

that information provided regarding the financial history of prospective

borrowers is accurate.

I. Fair And Accurate Reporting Is Essential To Equitable

Credit Markets For All Consumers

Credit markets are a key driver of social equality and economic

opportunity. As income and wealth disparities continue to grow,1

“homeownership remains the most likely way for individuals and

families of limited means to accumulate wealth.”2 Though

1 See http://wid.world/country/usa/ (Piketty, et al., World Wealth and Income

Database). 2 See Joint Center for Housing Studies, Harvard University, Is Homeownership

Still an Effective Means of Building Wealth for Low-income and Minority

Households? (Was it Ever?), Christopher E. Herbert, et al. (Sept. 2013) at p. 2.

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-06.pdf.


http://wid.world/country/usa/

www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-06.pdf

2

homeownership rates continue to languish,3 owning a home is still

synonymous with the American Dream, according to 84% of people

surveyed in a 2014 study.4 These vectors intersect in the mortgage

lending market, where a fair credit market determines not just personal

financial outcomes but broad social and public policy goals.

Congress created the Federal National Mortgage Association

(Fannie Mae) in 1938, in part, to provide stability and “promote access

to mortgage credit throughout the Nation by increasing the liquidity of

mortgage investments and improving the distribution of investment

capital available for residential mortgage financing.” 12 U.S.C. § 1716.

The Federal Housing Finance Agency (FHFA) was established in 2008

and regulates Fannie Mae, the Federal Home Loan Mortgage

Corporation (Freddie Mac) and the Federal Home Loan Bank System.5

Although Fannie Mae does not issue mortgage loans directly to

consumers (see 12 U.S.C. § 1719(a)(2)(B)), it purchases mortgages from

lenders, which provides an essential underpinning to the ability and

willingness of lenders to provide those loans at more affordable rates.

3 See https://www.census.gov/housing/hvs/files/currenthvspress.pdf 4 Merrill Lynch, Home in Retirement: More Freedom, New Choices, at p. 7, Fig. 5

(2015); available at agewave.com/wp-content/uploads/2016/07/2015-ML-AW-

Home-in-Retirement_More-Freedom-New-Choices.pdf.


www.census.gov/housing/hvs/files/currenthvspress.pdf

3

The volume of loans purchased by Fannie Mae – it provided

approximately $512 billion in liquidity in the mortgage market in

20185 – underscores how important Fannie Mae is in keeping the

American Dream alive, and particularly for low- and middle-income

borrowers.

These same borrowers are also dependent upon the consumer

protection laws that help ensure that their credit history is accurately

reported. The Fair Credit Reporting Act (FCRA) is a federal law

regulating consumer reporting agencies (CRAs), furnishers of

information, and users of reports. 15 U.S.C. §§ 1681, et seq. Congress

enacted the FCRA to ensure both accuracy and appropriate consumer

privacy protection in consumer credit markets. Among its purposes, the

FCRA requires:

consumer reporting agencies adopt reasonable procedures

for meeting the needs of commerce for consumer credit,

personnel, insurance, and other information in a manner

which is fair and equitable to the consumer, with regard to

the confidentiality, accuracy, relevancy, and proper

utilization of such information.

15 U.S.C. § 1681(b).

The FCRA provides certainty for consumers and businesses. Its

5 See http://www.fanniemae.com/resources/file/ir/pdf/quarterly-annual-

results/2018/q42018_release.pdf.


4

statutory framework has helped create an efficient and uniform credit

reporting system: it both promotes competition, ensuring that potential

creditors have access to the same information about potential

borrowers; and helps manage risk by providing dependable credit

information, without which creditors may not extend credit or may

extend it at higher costs to consumers to account for the higher level of

uncertainty and risk. See, e.g., Guimond v. Trans Union Credit

Information Co., 45 F.3d 1329, 1334 (9th Cir. 1995) (the “purpose of the

FCRA is to promote the accuracy of information in a consumer credit

report.”).6 As such, the FCRA is liberally construed to effect its

purposes. Id. at 1333.

In order for mortgage lenders to assess risk reliably, they must

be able to rely on accurate credit information. Accurate reporting of

mortgage-related credit information is essential to ensure that

consumers (and especially low- and middle-income consumers)

6 “The statute has been drawn with extreme care, reflecting the tug of the competing

interests of consumers, CRAs, furnishers of credit information, and users of credit

information. It is not for a court to remake the balance struck by Congress, or to

introduce limitations on an express right of action where no limitation has been

written by the legislature.” Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d

1057, 1060 (9th Cir. 2002); accord Boca Ciega Hotel, Inc. v. Bouchard

Transportation Co., Inc., 51 F.3d 235, 238 (11th Cir. 1995) (“In short, we will not

attempt to adjust the balance between competing goals that the text adopted by

Congress has struck”) (citation and internal quotation marks omitted).


5

continue to have access to all available credit opportunities. The

accuracy of the information provided about them is a foundational

element of consumer protection, individual and national economic

security, and the fair and efficient operation of the credit markets.

The District Court’s application of the FCRA to the facts in this

case is precisely the type of outcome envisioned by Congress when it

enacted the FCRA. The FCRA regulates the accurate reporting of

foreclosures and short sales. It requires consumer reporting agencies to

“assure maximum possible accuracy” when a report is “prepared.” 15

U.S.C. § 1681e(b). The FCRA does not establish a one-size-fits-all

definition of “accuracy.” However, the protection afforded by the

FCRA’s accuracy requirement is meant to ensure that consumers are

protected from material errors that result in the denial of a credit

opportunity.

The mortgage crisis that began in late 2007 rendered the

consumer protections afforded by the FCRA even more essential.

Millions of consumers lost their homes to foreclosure in the credit

crunch brought on by the crisis. Millions of others lost their wealth but

avoided the longer negative impact that a completed foreclosure would

have on their credit histories through mortgage loan modifications,


6

short sales and deeds-in-lieu of foreclosure. The FHFA reports that

through June 2018, approximately 2,257,644 loan modifications,

594,823 short sales and 93,865 deeds-in-lieu were completed for

homeowners with loans guaranteed by Fannie Mae and Freddie Mac.

See Federal Housing Finance Agency, Foreclosure Prevention Report,

at p. 4 (July 2018). Considering the drastic implications of a completed

foreclosure on the future ability to access credit, it is crucial that

mortgage loan modifications, short sales, and deeds-in-lieu are

accurately reported to avoid erroneous denials of credit opportunities.

This Court grappled with how Fannie Mae fits into the statutory

scheme envisioned by Congress, but a divided panel erroneously

concluded that Fannie Mae fell outside of it. That holding is not only at

odds with the statute’s overriding consumer protection goals and

intent; it ignores the outcome-determinative role Fannie Mae plays in

deciding whether credit opportunities are made available to low- and

middle-income individuals. See Gorman v. Wolpoff & Abramson, LLP,

584 F.3d 1147, 1153-54 (9th Cir. 2009).

More importantly, the holding also misinterprets Congress’s

intent as a matter of statutory construction. The panel majority

concluded that “the FCRA itself appears to make a distinction between


7

Fannie Mae and consumer reporting agencies.” 912 F.3d at 1200, citing

15 U.S.C. § 1681g(g)(1)(B)(ii). Yet this reference is to one specific

subsection of the FCRA, from which the distinction is made solely with

respect to that one subsection. 15 U.S.C. § 1681g(g)(1)(G) (“As used in

this subsection, the term ‘person’ does not include [Fannie Mae])”

(emphasis added). This is not indication of an intent to exempt Fannie

Mae from every provision of the FCRA. A more straightforward reading

is that the targeted exemption from one provision demonstrates that

Congress understood how and where to exempt Fannie Mae from

particular provisions of the FCRA. “[W]here Congress includes

particular language in one section of a statute but omits it in another

section of the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or exclusion.”

Russello v. U.S., 464 U.S. 16, 23 (1983).

II. Mortgage Screening Companies, Like Fannie Mae,

Which Furnish Reports Determining A Potential

Loan’s Eligibility For Resale In Secondary Mortgage

Markets, Are Consumer Reporting Agencies

The plain language of the FCRA, and the Congressional intent

animating it, support the conclusion that Fannie Mae is a consumer

reporting agency. The FCRA defines “consumer reporting agency” as:


8

Any person which, for monetary fees, dues, or on a

cooperative nonprofit basis, regularly engages in whole or

in part in the practice of assembling or evaluating

consumer credit information or other information on

consumers for the purpose of furnishing consumer reports

to third parties. ...

15 U.S.C. § 1681a(f).

In enacting the FCRA, Congress intended to regulate the

disclosure of a vast amount of personal information used in lending

decisions, information bearing not only on consumers’ “credit

worthiness, credit standing [and] credit capacity,” but also on their

“character, general reputation, personal characteristics, or mode of

living.” 15 U.S.C. § 1681a(d) (defining “consumer report”). Information

about an individual’s finances is particularly sensitive, California

Bankers Ass’n v. Shultz, 416 U.S. 21, 78-79 (1974) (Powell, J.,

concurring) (“Financial transactions can reveal much about a person’s

activities, associations, and beliefs.”), and for that reason it is

particularly important that, when disclosure of that information is

authorized, it be disclosed accurately. The Ninth Circuit and its sister

Circuits around the country have held that the FCRA must be liberally

construed in order to effectuate its purposes. See Guimond, supra, 45

F.3d at 1333; Jones v. Federated Financial Reserve Corp., 144 F.3d 961,

964 (6th Cir. 1998) (citing Guimond and noting that “the rule of


9

statutory construction requires us to read a statutory provision in a

manner consistent with the statute’s other provisions.”); Cortez v. Trans

Union, LLC, 617 F.3d 688, 706 (3d Cir. 2010).

Consistent with the elements of a consumer reporting agency and

a consumer report as defined under the FCRA, many courts have held

that a company that furnishes consumer reports to lending institutions

is a consumer reporting agency, even if other aspects of its business do

not relate to credit reporting. More than forty years ago, the Ninth

Circuit held that a check screening company is a consumer reporting

agency under the FCRA:

Under the Federal Fair Credit Reporting Act’s definition of

a “consumer report” (15 U.S.C. s 1681a(d)), the appellant’s

argument must be rejected. Not only does a report of the

previous issuance of an unpayable check bear “on a

consumer’s credit worthiness, credit standing, credit

capacity, character, general reputation (and) personal

characteristics. . .”, a check itself is, essentially, an

instrument of credit.

Greenway v. Info. Dynamics Ltd., 524 F.2d 1145, 1146 (9th Cir. 1975),

cert. denied, 424 U.S. 936. Since then, courts have found a wide variety

of companies to be CRAs. See, e.g., Freckleton v. Target Corp., 81

F.Supp.3d 473, 477 (D. Md. 2015) (employment background reports);

Jarzyna v. Home Props., L.P., 763 F. Supp. 2d 742 (E.D. Pa. 2011)

(tenant screening and debt collection organization that collected data


10

from rental applicants and combined it with information from other

CRAs assembled and compiled consumer information and was a CRA);

Adams v. LexisNexis Risk & Info. Analytics Group, Inc., Civ. No. 08-

4708, 2010 WL 1931135 (D.N.J. May 12, 2010) (collection reports);

Valentine v. First Advantage Saferent, Inc., 2009 WL 4349694 (C.D. Cal.

Nov. 23, 2009) (one of the largest nationwide tenant screening

agencies); Gill v. Byers Chevrolet LLC, No. 05-982, 2006 WL 2460872,

at *9 (S.D. Ohio Aug. 23, 2006) (holding plaintiff pled sufficient facts

that dealership was consumer reporting agency where it routinely

assembled his credit information and furnished it to lending

institutions); Cisneros v. U.D. Registry, Inc., 39 Cal. App. 4th 548, 560-

61 (1995) (tenant-screening); Estiverne v. Sak’s Fifth Avenue, 9 F.3d

1171, 1173 (5th Cir. 1993) (check- screening); Hoke v. Retail Credit

Corp., 521 F.2d 1079 (4th Cir. 1975) (Texas Board of Medical Examiners

evaluating application for license to practice medicine). Other

companies, including “people search” companies that utilize modern

data management techniques, have conceded the FCRA’s jurisdiction or

been fined by the Federal Trade Commission for violations of its


11

provisions.7

Thus, it is abundantly clear that companies with non-traditional

or mixed purposes are not exempt from the prescriptions of the FCRA.

Fannie Mae’s integral involvement in mortgage loan underwriting

decisionmaking brings it squarely within the definition of a consumer

reporting agency. Fannie Mae’s policy and practice of furnishing

Desktop Underwriter Reports to lending institutions involves the

“assembly” and “evaluation” of an individual’s credit profile, as those

terms are used in the FCRA. The DU program assesses whether loans

will be are eligible for resale in the secondary mortgage market – for

resale to Fannie Mae – and also clearly evaluates consumers’

creditworthiness, credit standing and credit capacity. Its continuing

involvement in the mortgage lending evaluations, through the

secondary market decisions, makes it far different than a third-party

technology company creating the DU software in question here, for use

for a purpose unrelated to the technology company’s business. It is not,

as the panel majority believes, “a distinction without a difference.” 912

F.3d at 1197.

7 See https://www.ftc.gov/news-events/press-releases/2014/04/two-data-brokers-

settle-ftc-charges-they-sold-consumer-data (data brokers).


http://www.ftc.gov/news-events/press-releases/2014/04/two-data-brokers-

12

The panel majority incorrectly concluded Fannie Mae did not do so

“for the purposes of furnishing a consumer report to lenders.” 912 F.3d

at 1198, 1200. The principle underlying that conclusion could have

disastrous implications for consumers who are forced to rely on the

accuracy of DU and similar reports. This is because Fannie Mae’s

conduct is well within the scope of, and every bit as integral to credit

decisionmaking as, the services provided by the “big three” credit

reporting agencies, as well as the tenant and check screening agencies

that were the subjects of the cases cited above at p. 8.

The implications of a contrary holding in this case would be

crippling for low- and middle-class borrowers and homeowners. The

panel majority’s decision would have the effect of opening an exemption

for every entity in the mortgage lending process, leaving nobody

responsible for ensuring the accuracy of consumer information – not

Fannie Mae, nor the entities buying, and of necessity relying on, the

reports from Fannie Mae. One of the core purposes of the FCRA is to

ensure the accuracy of the information contained in a consumer report,

because accuracy is essential to the fair treatment of consumers

entering the credit market.

If the panel’s decision stands, and Fannie Mae escapes the reach


13

of the FCRA, consumers would be left without remedy for material

errors in Fannie Mae’s consumer reports; without an ability to learn

who reported inaccurate information about them to the lenders; and

without a way to dispute those inaccuracies, or resolve them in a timely

fashion. The predictable outcome for consumers is that that they will

pay higher costs for credit, or be denied credit altogether, because of

being inaccurately portrayed as higher risk through the “foreclosure”

notation Fannie Mae included with short sales and deeds-in-lieu.

CONCLUSION

It would be dangerous to the fair operation of credit markets in

the mortgage lending world to create an exemption from the FCRA for

Fannie Mae. Applying the FCRA recognizes the integral role Fannie

Mae plays in the mortgage lending market and is in keeping with

Congressional intent. Fannie Mae meets the statutory definition of a

consumer reporting agency, and should be subject to the same accuracy

requirements as other businesses that evaluate consumer credit

worthiness. For that reason, Amici respectfully request that the Court

grant rehearing or rehearing en banc to reconsider the panel’s decision

and affirm the District Court’s decision.


14

Date: March 11, 2019 Respectfully submitted,


Christian Schreiber

Olivier Schreiber & Chao LLP

201 Filbert Street, Suite 201

San Francisco, CA 94133

(415) 484-0980



15

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Form 8. Certificate of Compliance for Briefs

9th Cir. Case Number(s): 17-15807 & 17-6000

I am the attorney for Amici Curiae National Association of

Consumer Advocates, United States Public Interest Research Group

Education Fund, Inc., Americans for Financial Reform Education

Fund, Center for Responsible Lending, and Consumer Reports.

This brief contains 2,783 words, excluding the items

exempted by Fed. R. App. P. 32(f). The brief’s type size and typeface

comply with Fed. R. App. P. 32(a)(5) and (6).

I certify that this brief (select only one):

[ ] complies with the word limit of Cir. R. 32-1.

[ ] is a cross-appeal brief and complies with the word limit of Cir.

R. 28.1-1.

[X] is an amicus brief and complies with the word limit of Fed. R.

App. P. 29(a)(5), Cir. R. 29-2(c)(2), or Cir. R. 29-2(c)(3).

[ ] is for a death penalty case and complies with the word limit of

Cir. R. 32-4.

[ ] complies with the longer length limit permitted by Cir. R. 32-

2(b) because (select only one):

[ ] it is a joint brief submitted by separately represented parties;

[ ] a party or parties are filing a single brief in response to

multiple briefs; or


16

[ ] a party or parties are filing a single brief in response to a longer

joint brief.

[ ] complies with the length limit designated by court order dated

_____________.

[ ] is accompanied by a motion to file a longer brief pursuant to

Cir. R. 32-2(a).

Signature: /s/ Christian Schreiber Date March 11, 2019


17

Dated: March 11, 2019

CERTIFICATE OF SERVICE

I hereby certify that on this 11th day of March, 2019, I

electronically filed the Foregoing Brief of Amici Curiae with the Clerk

of the Court for the United States Court of Appeals for the Ninth

Circuit by using the appellate CM/ECF system. I certify that all the

participants in the case are registered CM/ECF users and will be

served by the appellate CM/ECF system.


Christian Schreiber


Documents

Nos. 17-15807, 17-16000 UNITED STATES COURT OF ......2019/03/11 · minority families, primarily through safe, affordable home loans and small business loans. CRL conducts ground-breaking